Officials await slots details

CHAMBERSBURG, PA. - Legislation legalizing slot machines and providing for tax reform has been signed into law in Pennsylvania, but area school board members and administrators are unsure how much money 61,000 one-armed bandits will return to districts in terms of educational funding and tax relief.

"I'm concerned about getting into a situation predicated on people losing money," Chambersburg Area School District Superintendent Edwin Sponseller said Tuesday of funding tax reform through gambling.

"We need to wait and see what the details are before we know what impact it will have," said Chambersburg school board member D. Eugene Gayman.

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Administrators in the Waynesboro and Greencastle-Antrim school districts said they did not know enough about the new laws to comment.

Gov. Ed Rendell on Monday signed the bill allowing slot machines at 14 sites, as well as the tax reform bill that was a separate piece of legislation.

The slots bill would give the state 34 percent of revenues from gambling.

School district voters will have to decide whether they wish to take part in the tax reform plan, Sponseller said. If they do, he said voters could end up with veto power over future school budgets.

"Voters will be asked if they want to opt into the back end referendum," Sponseller said of the provision that would require voter approval for any real estate tax increase above an inflationary index determined by the state. Sponseller said he expects enough pressure locally to get tax reform on the local ballot for next spring's primary.

Referendum exceptions

There are 10 exceptions to the back end referendum requirement in the legislation, but Sponseller and other district officials said they do not yet know how those may affect Chambersburg, which is considering an ambitious building program.

The exceptions include language regarding a portion of construction costs; health-care costs related to existing union contracts; increases above 7.5 percent in a district's contribution to the state employees' pension system; and increases above 10 percent for special education.

Gayman said health care, special education and pension increases accounted for much of the district's increased spending in the 2004-05 budget.

State Rep. Patrick Fleagle, R-Franklin, who voted against both the slots and tax reform bills, said school boards would have to adopt an increase in the earned income tax from the current 1 percent to 1.1 percent to implement property tax relief. The current 1 percent tax is split between the districts and the municipalities in which they are located, he said.

In return, districts would be able to make a corresponding decrease in real estate taxes, Fleagle said.

"The tax relief in the Chambersburg Area School District is going to be the bare minimum, about 10 percent," Sponseller said. The average reduction statewide is supposed to be about 20 percent, according to the bill.

"My sense is ... that communities with lower tax efforts, like Chambersburg and most of the districts in Franklin County, would receive the minimum amount of relief," said school board member David Sciamanna.

Fleagle said the House estimated slot revenues at about $1 billion a year, but questioned whether those numbers would hold.

"The monies from slots are at least two years away," when actual tax relief would kick in, Fleagle said.

"My biggest fear, aside from the moral and ethical dilemma of gambling, is the can-you-top-this aspect," Fleagle said.

He said he expects Delaware, New Jersey and West Virginia to expand slot machine operations, while Maryland could legalize slots, thus siphoning off some of the projected revenues.

"It's all speculation on what the slots are going to generate," Sciamanna said.